OTTAWA -- Finance Minister Chrystia Freeland laid out how federal spending might be reshaped along a bumpy recovery, saying relief will be targeted and likely greater than what was needed after the last recession a decade ago, reported Canadian Press.

The federal government has spent unprecedented amounts in record time to limit the economic damage wrought by COVID-19, plunging the deficit to historic depths.

Freeland said doing too little would cripple businesses and workers who face hardship through no fault of their own, but noted some long-term damage is inevitable, from businesses never reopening to unemployed workers who won't find a new job.

Federal spending will be aimed at limiting that damage, Freeland said in an afternoon speech to the Toronto Global Forum, but she warned the capacity to spend isn't unlimited.

"We are going to have to build our way out of that (COVID-19) recession. That will require government investments," she said during the ensuing question-and-answer session.

"That government investment is going to need to . . . be thoughtful, it's going to need to be carefully targeted, and time-limited, and it's going to need to be focused on getting Canadians back to work."

Freeland said she'll have more to say soon on the rules and limits the Liberals will use to guide spending, rather than waiting for "more brutal external restraints" from the market.

The economy may not recover all that it lost earlier this year until at least 2022, the Bank of Canada forecasted Wednesday. The country has reversed about two-thirds of the economic decline seen in the first half of the year, the bank said, exceeding expectations.

Officials estimate the economy will still shrink by 5.7 per cent this year, but grow by 4.2 per cent next year, and 3.7 per cent in 2022. Even then, there may still be scars that need healing into 2023.

"We're going to get through this, but it's going to be a long slog," governor Tiff Macklem said during a late-morning press conference.

The bank held its overnight rate target at 0.25 per cent on Wednesday, which is where it will stay until the economy has recovered and inflation is back on target. The bank forecasts annual inflation at 0.6 per cent this year, one percent next year, and 1.7 per cent in 2022.

It's around 2023 that the central bank may start raising its key rate, the earliest the bank anticipates the economy would be able to handle higher rates, said James Laird, co-founder of Ratehub.ca.